Fundamentally Speaking

By Joel Karlin
Contributing Analyst

As expected, the initial rating of the 2014 U.S. corn crop as contained in the USDA's weekly crop progress and condition report was quite high.

The accompanying graphic shows as of the beginning of June the percent of the U.S. corn crop rated either as good or excellent and the aggregate crop rating using our usual ratings system where we weight the crop based on the percent in each category and assign that category a factor of 0.2 for VP, 0.4 for P, 0.6 for F, 0.8 for G, and 1.0 for EX and then sum the results.

Both of these are on the left hand axis and plotted against the percent that final U.S. corn yields deviated from the 25 year trend.

This year the first corn crop condition report had the combined good and excellent categories at 76% and that is well above the 1990-2013 average of 65.7%.

The weighted crop rating comes in at 77.4; also well above the 1990-2013 average of 74.1.

Keep in mind good crop ratings at the beginning of the year is no guarantee of favorable final yields.

In 2012, the initial crop rating was 76.2 with 72% of the crop rated either good or excellent as of the beginning of June.

Both of these were very high early June ratings and above the long-term averages.

A devastating drought, one of the worst in history soon developed and that resulted in final 2012 corn yields falling 24% below trend.

On the other hand, the U.S. corn crop got off to a horrible start in 1992 with the weighted rating 68.4 and a mere 47% of the crop in either the good or excellent categories.

Weather conditions improved from that point however resulting in a record yield at the time coming in 12.4% above trend.

The take home point here is so far so good but weather over the next 90 days will really tell the full story.

Joel Karlin, Western Milling

(KA)

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